n article in the last issue of Resourc- es addressed some of the many hu- man resource laws that can affect Assuming you haven’t violated any law, 3) Public policy—Never­ terminate an the agency as an employer. And if you there are still several common law excep- employee who was fulfilling some le- live in one of the 49 states that are em- tions you need to be concerned about. gal obligation or doing something that ployment at will states (sorry Montana), 1) If there is a real contract between the could be considered socially useful can you fire anyone, at any time, for any employer and employee, it may re- (like blowing the whistle on an illegal reason? quire and/or compensa- activity). The person who blew the tion continue for a specific period of whistle on the Enron scandal, Sharon Before you start playing Donald Trump, time. Watkins, wasn’t terminated by Enron its important that you have a basic con- and would have probably been one cept of some applicable common law 2) An implied contract is a verbal or of the last persons to be let go if she concepts. written statement indicating that em- hadn’t quit. ployment will be continued. Never 4) Employees, especially long-term em- Employment at Will say something like, “As long as I own this agency you will have a here.” ployees, should not be arbitrarily ter- Employment at will in essence means that Nor should you have an employee minated. If you end up getting sued, the employer can terminate an that talks about “perma- remember how it will look to the at any time, for any or no reason and that nent” employees. There have been jury. the employee can quit at any time, with- many cases where employee hand- out giving notice. However, employment books have been deemed to be con- Constructive Discharge at will is not applicable if it is prohibited tracts based upon the way they were You really want to terminate Bob, but by a federal, state, or local law or by an written. you don’t want it to appear to others that . you fired him and you don’t want to have 38 Resources | Summer/Fall 2005 him collecting and affecting your unemployment tax rate. So instead, you decide to make life miserable for him. You take away his of our excess policy came recently and I noticed that there was a laptop, discontinue his expense account, and quit notice of a new policy form in an envelope. I read the policy and giving him leads all the while you continue these it clearly provided coverage for liability claims arising from the benefits to all your other producers. Bob gets frus- watercraft exposure and the recre- trated and quits. ational vehicle exposure, as long as we had an underlying policy But did he really quit? In this situation the com- which covered the claim. There mon law concept of constructive discharge comes was a six-page endorsement at- into play. Constructive discharge is when the em- tached to the policy and I read it as ployer makes an employee’s work conditions so well. In the endorsement, the com- intolerable that he or she is forced to resign. While pany defined personal watercraft you didn’t break any laws, at the very least the separately and excluded all claims employee will most likely be able to collect unem- arising from owned personal wa- ployment. tercraft, regardless of underlying coverage. Summary If you want to terminate someone, do it and don’t The company also replaced the play games. But a wrongful termination suit can recreational vehicle exclusion with cost you hundreds of hours and hundreds of thou- an exclusion that took away cov- sands of dollars just defending yourself. Make sure erage for any claims arising from you protect yourself by having: owned recreational vehicles, also regardless of underlying coverage. 1) A good EPLI Policy. 2) A discussion about the termination with an em- Which brings me to my fourth and ployment law attorney before you terminate the final point. Make certain that the personal excess policy you’re individual. writing fits the customer. The excess policy we received works fine for us. We don’t own either recreational vehicles or personal wa- 3) Clear and accurate job descriptions. tercraft. Writing the same policy for another customer, who does 4) A good employee handbook. n own one or both of these things, might be a serous mistake. Learn More, Earn More To recap, there are four points to always keep in mind when work- ing with excess liability policies in personal lines: Sample job descriptions and a sample employee 1. Read the policies handbook are included in Managing Human Resources in an Insurance Agency, which is 2. Read the endorsements available from The National Alliance Research 3. Be aware of hybrid policies Academy. To order a copy, call 800-633-2165 4. Match the policy to the customer’s exposures n or go to www.TheNationalAlliance.com. The Agency Management Practices Ruble Seminar Learn More, Earn More also focuses on human resources issues. The Learn more about personal lines umbrellas at the CIC Personal CIC Agency Management Institute also provides Lines Institute or the two CISR courses that deal with personal information on this topic. lines: Insuring Personal Auto Exposures and Insuring Personal About the Residential Property. The James K. Ruble Personal Lines Seminar Author: Jon discusses advanced personal lines topics, including the personal Persky, CIC, lines umbrella policy. CPA, PHR Jon is the president of Op- timum Performance Solu- tions, LLC, a management consulting company for in- dependent agencies, and has held positions as con- troller, chief financial officer, and personnel direc- tor. Jon is a member of the national faculty for The National Alliance and the author of The Academy studies, Maximizing Agency Value II and Manag- ing Human Resources in an Insurance Agency.

Resources | Summer/Fall 2005 39